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KYC: Know Your Customer, AML Compliance Challenges underlying China Banks 2018
50%
44%
33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Repeated checksand manual
process
Lack of audit trailand evidence / recordsof checks performed
Lack of qualityreference data
Extended workinghours
Difficulty in settingup internal compliance
policy for all staffto follow
Others
78%
30%
57%
43%
30%
4%
Manual processes and quality data are the biggest challenges to China’s financial institutions.
What are the current challenges inyour compliance screening process?
What type of customer do you currently screen?
High net worth individual customers
41%Corporate customers with their senior management and beneficial owners
85%
Correspondent banks with their ownership structure and ultimate beneficial owners
80%
61%
Most screen correspondent or customer banks but almost half also screen High Net Worth (HNW) individuals. Accuity’s PEP data could be animportant component.
Counterparties or third-party payer
0%
10%
20%
30%
40%
50%
60%
70%
80%
PBOC AMT/CFT list Sanction List Politically ExposedPersons PEP
Stated OwnedEnterprise SOE
Adverse Media andenforcement data
59%
76%
67%
43%
56%
Sanction lists are fundamental to all banks and growing needs for PEP and other list are observed.
Which reference data do you need?
What are the challenges in identifying your customers as a PEP?
Lack of PEP database with comprehensive coverage
Hard to define a PEP
Identification of foreign passport
Others
50%
44%
33%
9%
Most of the financial institutions find that their greatest challenge to deal withPEP identification is their poor PEP database coverage.
74%
26%
4%
52%
30%
Public sources (annual report, commercialregistration information portal, etc.)
Public sources (annual report, commercialregistration information portal, etc.)
Direct from customers
In-house research
Third-party data provider
Others
Most banks use very manual processes for checking UBO with a quarter using a third-party provider.
How do you check owner(including ultimate beneficiary owners)information of your customers?
80%
43%
4%20%
Corporate customers with senior management and
beneficial owners
High net worthindividual customers
Correspondent banks with their ownership structure and ultimate beneficial owners
Others
UBO is found as the highest/ most significant impact in the KYC process
Which of the risk areas having the most significant impact on your currentKYC on-boarding process?
What is the frequency for AML/CTF checks on your (customers / trade transaction / counterparty)?
15% 17%20% 37%
Once every quarter Once every 6 months Once a year Others
Internal system integrated with screening function
Transaction monitoring
systems
Others Reference dataprovided by
partner / associations
Public sources(OFAC,EU, etc)
Third-partylookup tools
Others
What are the reference datasources used in your current
screening process?
What types of screening doyou currently have?
The vast majority of respondents (Financial Institutions) only have a transaction monitoring system and most use lookup tools. This could explain the compliance’s team frustration with lack
of automation and the reliance on manual work.
30% 72%2%
35% 31% 59% 4%
Have an automatic screening function
Reduce the false postive rate
Add on-going monitoringfunctions / automatically alert users
for new matches
Improve audit trail and record keeping functions
Improve the screening accuracy and set alert for high risks
accounts / payments
Have more updated and higher coverage for data (i.e. Sanction lists /
PEPs data)
Set up workflow for differentlayers of personnel to review the
screening results
Automation and accuracy/reduction of false positives are key improvements sought,Accuity’s Global Watch List and UBO
data could be an important requirememnt.
What improvements are needed for your current AML/CTF
screening system?
67%
52%
43%
30%
57%
48%
48%
0%
5%
10%
15%
20%
25%
30%
35%
There is an even split between team sizes. Most of the teams are nine or fewer people.Most financial institutions have less than nine employees in the compliance team.
Companies should constantly refresh and improve the compliance program via automation.
31%
26%
31%
4%
9%
1 - 3 4 - 6 7 - 9 Third-Party Others
What is the size of your AML / Compliance team?
Set priority in effective KYC Compliance Program with Accuity’s scalablesolution and complex data in order to optimise resources
and stay compliance ready at all times.
www.accuity.com
Boston, Brooklyn (SA), Chicago, Dubai, Frankfurt, Hong Kong,London, Miami, New York, Paris, San Diego, São Paulo, Shanghai, Singapore, Strassen, Sydney, Tokyo
[email protected] Accuity
At the recent KYC compliance conference in Shanghai, China, Accuity conducted a market survey with the leading banks’ compliance & AML professionals. Highlighted below is a synopsis of some of the key findings from the survey.